A fresh generation of creative directors is stepping into the spotlight at major luxury goods brands, injecting a renewed sense of optimism into an industry that has weathered muted growth in the past two years.
Their debut collections, unveiled during recent fashion weeks in Milan and Paris, signal a new burst of creativity, with an aesthetic shift from understated, minimalist looks toward a colorful and bold maximalism. This stylistic pivot, often referred to as the “fashion pendulum,” could have meaningful implications for investors.
“Should the fashion pendulum gradually swing back towards more maximalism, the commercial impact could be material, as consumers traditionally need more new pieces when dressing more ostentatiously,” says Morgan Stanley’s Head of European Luxury Brands Research Edouard Aubin. “A key question for investors is: Can supply create its own demand?”
A New Creative Class
The current moment marks an unprecedented turnover in creative leadership. More new creative directors are debuting at top luxury houses than at any time in the past three decades. These fresh voices are replacing long-tenured designers whose once-revered collections had begun to lose momentum.
Industry insiders—including store buyers, stylists and fashion journalists—largely agree that this creative resurgence could boost consumption as consumers refresh or expand their wardrobes, potentially increasing the number of units sold per customer. Their optimism is echoed by academic research suggesting that the visual stimulation of maximalist styles can drive desire and accelerate the perceived obsolescence of previous collections.
“The work presented by new creative directors at recent fashion shows was well received by our contacts,” Aubin says. “Industry insiders have turned more positive about luxury’s prospects in the medium term than at any point in time over the past two to three years.”
Risks to the Recovery
Still, Morgan Stanley Research maintains a cautious outlook for the sector, projecting below-average expansion through 2026. Challenges persist, including sluggish sales in China, weak demand from middle-income consumers and unfavorable currency movements—particularly the euro’s appreciation against the U.S. dollar, Chinese yuan and Korean won.
Historically, fashion trends have mirrored economic cycles, with ostentatious dressing flourishing during boom times. Given the muted prospects for recovery in China and Europe, any shift in consumer behavior may unfold gradually.
“But we think investors will want to engage a touch more with the luxury sector given the fact that the bull case is strengthening,” Aubin added. “On the supply side, the industry could benefit from increased creativity, while demand could get a boost from the wealth effect in the U.S. and potentially in China, should the strong momentum of the equity market continue.”
